Finance Management

Question

20) Bill’s Binkies, Inc. sells all of their goods on credit. Bill’s expects to collect 65% of their sales in the quarter of sale and 35% for the quarter following the sale. Accounts receivable at the end of last year totaled $3,000,000, all of which will be collected in the first quarter of the coming year. Bill’s never experiences bad debts since his customers always pay! Bill's sales budget shows the following projected sales revenues:

Answer 1

Budgeted revenue is $34.3mm calculated by the following logic. EoY accounts receivables are $3mm which equates to 35% of Q4 sales. $3mm/35% means that full revenue for Q4 was $8.57mm which when annualized gives you $34.3mm